Screw the Competition: How to avoid dreaded commodification

In high school, I never quite found my niche. I wasn’t a jock or preppie, neither freak nor geek. I just had to be me.

In other words, my focus was on my intrinsic value proposition, not what the competition was doing.

Competitive analyses are valuable, don’t get me wrong. They are necessary to ensure you have a unique value proposition. After all, your product isn’t for sale in a vacuum. I’ve worked with a competitive sales office in the past and you can learn a lot from win-loss reports as well.

But don’t go too far with this business intelligence. My point is this …

And if your focus is on the competition, it’s in the wrong place. Your focus should be on the customer. That’s the way you create differentiated value.

Here are three examples of focusing on the customers, not the competition, from otherwise commodified industries:

Example #1: Southwest Airlines

Airlines have become a dreadfully commoditized industry. Just look how they move in lockstep. One airline adds baggage fees, and then every other “me too” airline jumps in behind it.

Not Southwest Airlines. I’m sure it has analyzed the competition. I’m sure it is aware of fee revenue.

But that simply doesn’t work for this brand. So Southwest offers “No change fees. No matter what.” And communicated that value proposition cleverly in a recent TV ad about a coach who believed in his basketball team so much, he already booked tickets to the championship game.

The kicker, of course, is that the team doesn’t make it to the championship game and has to change their flight plans. Cue the tagline — “That’s Transfarency. Low Fares. Nothing to Hide.”

Does this mean you’ll fly Southwest every time? Probably not. I know I prefer non-stop flights. And you might have a favorite frequent flyer program.

But I tell you this — next time you’re charged $200 for canceling a flight, you’re going to remember that Southwest commercial. And if you go through negative experiences with your current airline enough, you may choose not to shop only on price but to favor flights from Southwest Airlines.

Example #2: Target

Target is a discount retailer. So it’s in a space that is almost the very definition of a commodity brand — its main lure is selling on price.

And Target may use complex marketplace price scanning software and price matching guarantees to ensure it won’t get undersold.

But for its brand identity, Target has forged its own path and taken the counterintuitive approach of partnering with luxury brands. Very different than the “stack ‘em high, watch ‘em fly” focus on generics approach discounters use to communicate the perception of low prices.

Target is not just a cheap store, it’s cheap and chic — Tar-zhay.

Take its exclusive partnerships with luxury brands, for example.

In a Harvard Business Review article about Target’s partnership with Lilly Pulitzer, Denise Lee Yohn said, “Mass retailers struggle with value perceptions, since so much of their brand appeal is driven by low prices. Target has used its partnerships with designers to improve its perceived brand value, and the buzz that the Lilly Pulitzer sell-out created only increased that perception … moreover, the promotion highlighted exclusive products, another powerful weapon many retailers use to combat commoditization.”

After all, customers don’t only want low prices. They want low prices on things they want to buy.

Example #3: Xfinity Mobile

Quick quiz. How are any of the cell phone carriers different? Do they all make calls? Do they all allow mobile internet? Do they all allow unlimited plans?

You pay for data 1 GB at a time and share it across all your family’s devices (although there is also an unlimited option). And when you’re in a location with a Comcast Wi-Fi HotSpot, the phone automatically uses that instead of your data.

The result — you’re only paying for the data you use. Unlike with an unlimited plan, there is no loss aversion. Essentially, you never get the feeling that you’re paying for something you have wasted.

Is it for everybody? Certainly not. (And I’m not crazy enough to have my teen daughter on the plan).

But that’s the point of value differentiation. You focus on the customers you can best serve, not necessarily the customers your competition serves.

So you sacrifice some of the addressable market for your product, yes. However, you gain more customers in return who prefer your brand and avoid that dreaded commodification.

Is there risk involved in this approach?

Hell yes, there is.

But I’m not sure there’s any less risk than following the herd and looking to your competitors for brand signals. Who knows, that herd might be heading off a cliff?

But more important, sticking to your unique value proposition is a way to build a more passionate brand with more passionate customers and more passionate employees.

Before Rickles was well known, his mother convinced the very famous Frank Sinatra to attend one of Rickles’ stand-up performances. Sinatra was sitting right in the front row, and Rickles had the gall to say some pretty harsh jokes at Sinatra’s expense.

When Rickles is asked about it by interviewer Eric Spitznagel, he doesn’t understand what the big deal was. After all, Frank thought it was funny.

Spitznagel says, “But if he hadn’t, you blew your one chance to make an impression on the guy who could change your life.”

And Rickles responds, “So what? So what if it never happened for me? You got to be true to yourself, right? You play the room the way you need to play it.”

So screw the competition. You play the room with your brand the way you need to play it.

Daniel Burstein, Senior Director of Editorial Content, MECLABS. Daniel oversees all content and marketing coming from the MarketingExperiments and MarketingSherpa brands while helping to shape the editorial direction for MECLABS – digging for actionable information while serving as an advocate for the audience. Daniel is also a speaker and moderator at live events and on webinars. Previously, he was the main writer powering MarketingExperiments publishing engine – from Web clinics to Research Journals to the blog. Prior to joining the team, Daniel was Vice President of MindPulse Communications – a boutique communications consultancy specializing in IT clients such as IBM, VMware, and BEA Systems. Daniel has 18 years of experience in copywriting, editing, internal communications, sales enablement and field marketing communications.